Italy: Red Revival?

Italy's former Communists could turn out to be the big winners from the country's political scandals. Pressure is likely to build for Prime Minister Giuliano Amato to step down following the Apr. 18 referendum on electoral reform. If he does, the Party of the Democratic Left, the renamed Communists, may well play a prominent role in a transitional government, and they could score big in elections expected later in the year. Recent polls now make the PDS Italy's leading party, with the approval of more than 20% of the electorate. The Communists, cut out of government for 40 years, have been relatively unscathed by corruption charges.

Business leaders worry that a red-tinged government could frighten investors, breaking a recovery that is just starting to roll. The export-led upturn is aided by a 30% depreciation of the lira and low inflation. Labor costs over the last 12 months rose only 3%, after 10% jumps in 1990 and 1991.